JOHANNESBURG - The South African currency oscillated as opposing forces of a weakening greenback and caution ahead of the budget speech weighed according to NKC Research.
The dollar snapped a two-day winning streak, partially in reflection of the minutes from the January 26-27 FOMC meeting reaffirming the Fed’s extremely dovish forward guidance. The Fed revised forecasts for economic growth in 2021 relative to the December forecast to incorporate the impact of the fiscal relief passed in December and the assumption of further “sizeable” fiscal stimulus in the near-term.
Faster vaccine dissemination, additional fiscal stimulus, and elevated household savings should continue to underpin a strong economic revival in the US. Eventually, faster economic activity should boost inflation to around 2 percent and lead the labour market to full employment by 2023, thereby satisfying the conditions for rate lift-off. A gradual tapering of QE asset purchases should precede this, starting in 2022.
At the close of local trade, the rand quoted 0.24 percent lower at R14.66/$, after trading in range of R14.50/$ - R14.73/$. The local unit traded little changed overnight. Expected range today R14.50/$ - R14.75/$.
South African bourse
The JSE All Share (-0.80 percent) dipped broadly lower yesterday as major sectors stumbled, large gold mining (-3.71 percent) stocks in particular. In the overall emerging market sphere, the MSCI Emerging Market Index (-0.42 percent) traded on the back foot.
Brent crude oil
The Brent oil price soared to a 13-month high yesterday, as a cold front in Texas and surrounding regions halted nearly a fifth of US refining output and the production of a million barrels of US crude. At the close of local trade, benchmark Brent crude futures quoted 0.05 percent weaker at $64.37pb. Crude prices traded softer during Asian trade this morning.
BUSINESS REPORT ONLINE